AI and Stock Prices

AI can also augment and enhance creative potential of white collared workers. While clearly some of these jobs are likely to be replaced, newer jobs might get created. Broad generalizations are difficult or uncertain, especially over a 5 year horizon, by when firms may reinvent
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This will happen only if AI destroys the franchise value of those firms. If they adopt AI and use it to cut their costs, while preserving their franchise value, there could be employment losses without damage to stock market values.

I puzzle to make sense of the question. If workers get 10x more productive, that should make profits and the firm more valuable, no? I thought the (false) worry was jobs, and capital earning everything.
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Depends on whether the white color services are an input (AI lowers cost) or an output (AI lowers demand, possibly).

Just because white-collar employees are laid off does not mean stock prices will retreat. Remaining employees harnessing AI can boost productivity. But certain industries will be decimated, like the tax preparation industry. Also, we no longer need 36,000 new lawyers per year.

There are just too many scenarios to quantify this. The Citrini Scenario assumes large organizations respond way, way more quickly than is plausible. If you work in a large organization, ask yourself whether your firm could pivot that quickly.

Yes, provided firms with large share of white-collar workers aren't able to adapt as quickly to using AI as newer firms.

I think the opposite. Technology usually leverages human capital.

Who the winners and losers are going to be (in terms of profits) and what the general equilibrium effects are going to be seems unclear at this point.

Automation can cut costs; when adopters keep those savings, valuations rise. Productivity can make adopters grow faster, which also lifts valuations. Product-market competition can do the opposite: if AI-native firms or new entrants move faster, incumbents get displaced.
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If the stock market is efficient, one would not expect substantial reductions in current stock-market valuations for any reason, including AI. Are the current values of white-collar firms lower than before due to AI forecasts? For some, yes; for others, no.

It's impossible to know now whether AI will increase or decrease competition. Internet was supposed to increase competition but did not increase labor's share. it's also unclear that AI really substitute for white collar work, or complements it

There will be winners and lovers from AI, but the aggregate stock market value of all white collar employers will rise due to the productivity gains and the reduced labor expenses.
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Current lower valuations and increased volatility of firms such as Salesforce and Oracle.

Even if these firms survive AI, they are unlikely to keep the pricing power for their services.